Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q4 2018 Earnings Presentation
26 slides from Onemain's earnings presentation, Feb 12, 2019
Slide 1: 4Q 2018 Earnings Presentation
OneMain Holdings, Inc. (NYSE: OMF) 4Q 2018 Earnings Presentation February 12, 2019
Slide 2: Important Information
Important Information This document contains summarized information concerning OneMain Holdings, Inc. (the “Company”) and the Company’s business, operations, financial performance and trends. No representation is made that the information in this document is complete. For additional financial, stati
Slide 3: Important Information: Use of Non-GAAP Financial Measures
Important Information Use of Non-GAAP Financial Measures We report the operating results of Consumer and Insurance, Acquisitions and Servicing, and Other using the Segment Accounting Basis, which (i) reflects our allocation methodologies for certain costs, primarily interest expense, loan loss reser
Slide 4: 4Q18 Executive Summary
4Q18 Executive Summary Financial ▪ Net income of $168MM and diluted EPS of $1.24 Performance ▪ C&I adjusted net income* of $189MM and adjusted diluted EPS* of $1.39 ▪ C&I ending net receivables* of $16.2B, up 9% vs. 4Q17 Receivables ▪ C&I yield* of 23.8%, flat to 4Q17 ▪ C&I net charge-off ratio* of
Slide 5: 4Q18 Financial Performance
4Q18 Financial Performance ($ in millions, except per share statistics) Consistently generating superior returns Earnings Summary C&I Adjusted Earnings Summary* 4Q18 3Q18 4Q17 4Q18 3Q18 4Q17 Consumer & Insurance* $248 $235 $229 Interest Income $959 $935 $875 Acquisitions & Servicing* 0 0 0 Other Net
Slide 6: FY 2018 Financial Performance
FY 2018 Financial Performance ($ in millions, except per share statistics) Consistently generating superior returns Earnings Summary C&I Adjusted Earnings Summary* 2018 2017 2018 2017 Consumer & Insurance* $905 $760 Interest Income $3,677 $3,305 Acquisitions & Servicing* 1 1 Other Net Revenue 366 38
Slide 7: Net Income Trends
Net Income Trends ($ in millions) Continued improvement in GAAP and C&I adjusted net income Net Income C&I Adjusted Net Income* GAAP Net Income Tax reform impact $189 Fortress transaction $179 $168 $160 $160 $144 $148 $124 (1) $81 (2) $106 $39 $7 4Q17 1Q18 2Q18 3Q18 4Q18 *See appendix for reconcilia
Slide 8: Receivables (C&I)
Receivables (C&I)* ($ in billions) Consistent and disciplined receivables growth Ending Net Receivables (“ENR”) 4Q18 Key Highlights $16.2 $15.8 ▪ Originations of $3.3, up from $3.1 in 4Q17 $15.4 $14.8 $14.9 ▪ Secured originations 53% of total, up from 44% in 4Q17 ▪ Secured ENR 47% of total, up from
Slide 9: Credit Metrics (C&I)
Credit Metrics (C&I)* ($ in millions) Credit trends remain stable 30-89 Days Delinquent 90+ Days Delinquent $393 $365 $362 $369 $339 $338 $328 $322 $310 $293 2.3% 2.4% 2.4% 2.1% 2.3% 2.3% 2.3% 2.1% 2.0% 1.9% 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Net Charge-offs 4Q18 Key Highlights $264 $
Slide 10: Operating Expense (C&I)
Operating Expense (C&I)* ($ in millions, ANR $ in billions) Achieving operating leverage while reinvesting in our business (3) Operating Expense & OpEx Ratio $1,197 $1,247 $320 $317 $312 $299 $298 8.4% 8.6% 8.2% 8.2% 8.0% 8.1% 7.8% 4Q17 1Q18 2Q18 3Q18 4Q18 FY17 FY18 (1) (1) ANR $14.6 $14.9 $15.1 $15
Slide 11: Funding & Capital
Funding & Capital Diverse funding with strong capital and liquidity 4Q18 Funding & Capital 4Q18 Liquidity (2) ▪ Tangible leverage* improved to 6.9x ▪ Liquidity runway of 24+ months (1) ▪ Secured funding mix of 48% ▪ Undrawn conduit capacity increased to ~$6.0B ▪ $100MM proceeds on sale of real estat
Slide 12: 2018 Strategic Priorities
2018 Strategic Priorities Building shareholder value while reinvesting in our business 2017 2018E 2018A Ending Net Receivables $14.8B +8 to 10% +9% C&I Segment * Yield 23.8% Stable 23.9% Net Charge-offs 7.0% 6.5 to 6.7% 6.5% Operating Expense $1.2B +5% +4% Balance Sheet (1) (2) Secured Funding mix ~
Slide 13: 2019 Strategic Priorities
2019 Strategic Priorities Building shareholder value while reinvesting in our business 2018A 2019E Yield 23.9% Stable C&I Segment Metrics* Net Charge-offs 6.5% < 6.5% Operating Expense $1.2B +3% C&I Ending Net $16.2B +5 to 10% Receivables* Balance Sheet Tangible Leverage* 6.9x 6.0x *See appendix for
Slide 14: 2019 Capital Policy
2019 Capital Policy Investing in organic growth, strengthening our balance sheet, and providing capital returns to shareholders Capital Policy Organic Growth Deleverage Capital Return ▪ Disciplined receivables ▪ Strengthening balance sheet ▪ Initiating quarterly dividend of growth of 5-10% $0.25 per
Slide 15: Appendix
Appendix 15
Slide 16: Consolidated Income Statements
Consolidated Income Statements (unaudited, $ in millions, except per share statistics) 4Q18 3Q18 2Q18 1Q18 4Q17 FY18 FY17 Finance Charges $954 $930 $902 $859 $854 $3,645 $3,183 Finance Receivables Held for Sale Originated as Held for Investment 4 3 3 3 3 13 13 Total Interest Income 958 933 905 862 8
Slide 17: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, $ in millions) 12/31/18 9/30/18 6/30/18 3/31/18 12/31/17 Cash and Cash Equivalents $679 $1,243 $556 $1,807 $987 Investment Securities 1,694 1,707 1,720 1,706 1,697 Personal Loans 16,164 15,750 15,384 14,858 14,823 Other Receivables (1), (2) 0 0 124 129 134 Net
Slide 18: Balance Sheet Metrics
Balance Sheet Metrics (unaudited, $ in millions) 12/31/18 9/30/18 6/30/18 3/31/18 12/31/17 Total Assets $20,090 $20,468 $19,640 $20,467 $19,433 Less: Goodwill (1,422) (1,422) (1,422) (1,422) (1,422) Less: Other Intangible Assets (388) (398) (409) (428) (440) Tangible Managed Assets $18,280 $18,648 $
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, $ in millions) 4Q18 3Q18 2Q18 1Q18 4Q17 FY18 FY17 Consumer & Insurance $234 $226 $154 $174 $219 $787 $676 Acquisition & Servicing 0 0 0 1 0 1 1 Other (9) (4) (109) (10) (7) (132) (41) Segment to GAAP Adjustment (11) (23) (2) 3 (25) (32) (205) Income Be
Slide 20: Reconciliation of Non-GAAP Measures (continued)
Reconciliation of Non-GAAP Measures (continued) (unaudited, $ in millions) 12/31/18 9/30/18 6/30/18 3/31/18 12/31/17 Consumer & Insurance $16,195 $15,777 $15,406 $14,870 $14,820 Acquisition & Servicing 0 0 0 0 0 (1) Other 0 0 131 136 142 Segment to GAAP Adjustment (31) (27) (29) (19) (5) Net Finance
Slide 21: Consumer & Insurance Segment (Non-GAAP)
Consumer & Insurance Segment (Non-GAAP) (unaudited, $ in millions, except per share statistics) 4Q18 3Q18 2Q18 1Q18 4Q17 FY18 FY17 Interest Income $959 $935 $911 $873 $875 $3,677 $3,305 Interest Expense (220) (218) (212) (194) (195) (844) (765) Provision for Finance Receivables Losses (275) (253) (2
Slide 22: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited) 4Q18 3Q18 2Q18 1Q18 4Q17 FY18 FY17 Revenue (1) 26.4% 26.3% 26.4% 25.9% 26.5% 26.2% 26.6% Net Charge-Off (6.3%) (5.8%) (6.6%) (7.2%) (6.4%) (6.5%) (7.0%) Risk Adjusted Margin 20.1% 20.5% 19.8% 18.7% 20.1% 19.8% 19.6% Operating Expenses (7.8%
Slide 23: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, $ in millions) 4Q18 3Q18 2Q18 1Q18 4Q17 FY18 FY17 Gross Charge-Off $285 $260 $285 $297 $264 $1,127 $1,100 Gross Charge-Off Ratio 7.1% 6.6% 7.6% 8.1% 7.2% 7.3% 7.9% Recovery $30 $31 $35 $33 $28 $129 $129 Recovery Ratio 0.8% 0.8% 0.9% 0.9% 0.8
Slide 24: Acquisitions and Servicing Segment (Non-GAAP)
Acquisitions and Servicing Segment (Non-GAAP) (unaudited, $ in millions) 4Q18 3Q18 2Q18 1Q18 4Q17 FY18 FY17 Portfolio Servicing Fees from SpringCastle $7 $8 $8 $9 $10 $33 $40 Other 0 0 0 0 0 0 2 Total Other Revenues 7 8 8 9 10 33 42 Operating Expenses (7) (8) (8) (8) (10) (32) (41) Total Other Expen
Slide 25: Other (Non-GAAP)
Other (Non-GAAP) (unaudited, $ in millions) 4Q18 3Q18 2Q18 1Q18 4Q17 FY18 FY17 Finance Charges $0 $2 $3 $3 $3 $7 $12 Finance Receivables Held for Sale Originated as Held for Investment 4 2 2 2 2 10 11 Interest Expense (4) (4) (5) (5) (5) (17) (21) Provision for Finance Receivable Losses 0 0 3 2 0 5
Slide 26: Glossary
Glossary Select Calculations: • Adjusted Debt = Long-Term Debt – Junior Subordinated Debt • Adjusted Tangible Common Equity (TCE) = Total Shareholders’ Equity – Goodwill – Other Intangible Assets + Junior Subordinated Debt • C&I Adjusted Diluted EPS = C&I Adjusted Net Income (Non-GAAP) / Weighted Av